Beijing-based Air China, which raised $1.1 billion in a dual listing in Hong Kong and London in December, 2004, now has a market capitalization of $37.4 billion, higher than that of British Airways, Southwest Airlines and Singapore Airlines combined.

Air China had just a minimal presence in Shanghai which is China’s busiest airport in terms of capacity and will probably overtake Hong Kong as the biggest aviation hub in Asia within the next decade.

Now Air China will buy up to 30% of China Eastern. Not a great catch. The poorly managed, Shanghai-based airline hasn’t made a profit since 2003 and has been near bankruptcy.

Where Air China will hit a major problem is on international flights — especially to and from the United States. Passengers judge airlines by their inflight service and Chinese airlines, internationally, are simply not in the race.

Passengers chose their service of nationality, language, quality of service and sometimes on price. The major Chinese airlines fail on all of these.

Air China may well have won an interesting battle. But it is far from winning the war.
Source: Business Week

Boeing and Airbus need to seriously look at their planning systems. Compared to those of China they are very definitely third world.

Both are suffering the sort of delays which will make their major customers — think China — that it is quicker and better and cheaper to build the damn thing themselves.

Boeing has said the inaugural flight of its much-anticipated B787 would be delayed by up to three months to the end of the second quarter due to supply chain problems and slow progress on the assembly line.

The delay means Boeing will not be able to start delivering the plane until early 2009, rather than late 2008.

This is the third time Boeing has announced delays for the hot-selling airplane. Which makes is look like a very silly billy.

Scott Carson, president and CEO of Boeing Commercial Airplanes, said in a statement, ‘The fundamental design and technologies of the 787 remain sound. However, we continue to be challenged by start-up issues in our factory and in our extended global supply chain.’

In other words we cannot make it on time. Perhaps a new approach is needed?

The B787, also called the Dreamliner, has been the most successful new jet launch in history with 817 orders, including 60 from five Chinese airlines — Air China, China Eastern Airlines, China Southern Airlines, Hainan Airlines and Shanghai Airlines.

Boeing China yesterday declined to say when China would receive its first B787 after the latest delay. Certainly this century. Almost without a doubt.

Air China was originally scheduled to receive two B787s in 2008, with one delivered in June. The aircraft will be used on its European or US routes. The Chinese flag carrier has ordered 15 B787s.

An unnamed official from the Beijing-based carrier yesterday said the airline was capable of adjusting its fleet to the delay.

Wu Yucun, an aviation analyst with Shenzhen-based Lianhe Securities said, ‘The B787 delay is unlikely to have a big impact on Chinese airlines ‘expansion given the relatively small number. ‘ He was just being kind.

Boeing builds its commercial airplanes in Seattle and has outsourced an unprecedented amount of the B787 program — including design and production — to manufacturers around the world. It wrestles with complex product development in terms of technology and program management.

Airbus’ flagship A380 superjumbo was delayed by nearly two years.

In other industries if these delays occured there would be tears before tea time. ‘We’re sorry your daily paper will not be available until next week but we are having trouble with ink.’
Source: China Daily

According to the General Administration of Civil Aviation of China (CAAC) an estimated 22 million passengers traveled by air during the Spring Festival, 10% more than the same period a year ago.

The seven-day Spring Festival holiday, China’s traditional lunar new year, is the busiest time for transport companies as many Chinese go back to their hometowns for family reunions.

The administration said the air traffic in major airports in Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu and Kunming was strictly controlled to ensure smooth and safe flights.

The new third terminal at the Beijing Capital International Airport, which aims to enhance transport capacity greatly, comes into operation this month.

The CAAC is firm in stating it will stop taking applications for the founding of new airlines before 2010.

Li Jiaxiang, the CAAC’s acting director, said the administration would strictly examine the applications it had received and approve the establishment of no more than three new airlines each year.

He said, mincing no words, that China’s airlines need to brush up their management, attract more talent to the industry and upgrade infrastructure.

China now has more than 40 domestic airline companies, and less than 10 are state-owned.
Source: China View

Some aircraft do not take off this fast. China’s civil aviation traffic soared 16% to 185 million passengers last year, triggering government plans for curbs on industry growth to ensure safety.

The China Daily newspaper quoted state aviation chief Li Jiaxiang as saying the booming sector was growing too fast, raising safety risks, and needs to be brought under control.

Volume is projected to surge another 14% in 2008 to 210 million passengers, the paper said, citing figures from the General Administration of Civil Aviation.

Li Jiaxiang said, ‘The structure is outstandingly imbalanced, safety risks continue to rise and economic returns remain low.’

Curbs will include ‘tighter restrictions on new airlines entering the market’ and controls on the numbers of aircraft that airlines can purchase.
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It cited official figures saying that, despite the growth, there had been no major aviation accidents in China for 37 months, a record for the industry.

Li Jiaxiang said that under the new measures aimed at maintaining that record, airlines that have difficulty supplying required numbers of cockpit crew would not be allowed to import new aircraft or open new routes.

The government also placed a ban on new airline applications until 2010 and would more closely scrutinize investors, plane ownership and pilot quality.

Li Jiaxiang, named head of the aviation authority last month, is widely known to oppose foreign airlines gaining greater access to China’s skies. He believes domestic airlines also would be encouraged to open more long-distance international routes to raise their overseas market share.
Source: China Post

US Airways has been awarded a license for a US-China air becoming the sixth US carrier to be granted the permit.

The Arizona-headquartered US Airways will be competing with American, Continental, Northwest, United and Delta Airlines.
And the competition will be tougher because the US Department of Transportation time also awarded additional US-China passenger flights to American Airlines, Continental Airlines and Northwest Airlines.

US Airways will fly between Philadelphia and Beijing, while American, Continental and Northwest each will use their new rights to add a daily flight to their existing US-China services.

American Airlines will begin a Chicago-Beijing service, while Continental will operate a new flight between Newark/New York and Shanghai, and Northwest will fly between Detroit and Shanghai.

This will all come into play relatively quickly and the number of daily flights between the United States and China will double over the next five years. The aim is to get to something like 23 passenger flights a day to China by 2012.

China is the fastest-growing aviation market in the world after passenger traffic hit 160 million in 2006, up 15% on the previous year.

CAAC estimates that passenger volumes will maintain double-digit growth up to 2010.
Source: People’s Daily Online